Demotech Affirms Financial Stability Ratings Assigned to Underwriters

October 9, 2012

Demotech, Inc. has affirmed the Financial Stability Ratings (FSRs) assigned to title underwriters based on a review of second quarter 2012 statutory financial information.

No FSR revisions were made following the review of this information. The affirmation of the FSRs is based on a review of second-quarter 2012 statutory financial information as well as a review of reinsurance agreements, agency appointment guidelines, agency review procedures and defalcation prevention procedures for each title underwriter.

In its annual review of reinsurance arrangements, agency appointment guidelines, agency review procedures and defalcation prevention procedures for title underwriters, Demotech found no material issues pertaining to established practices and procedures. While, this is not a guarantee that no defalcations will occur, title underwriters have documented processes and procedures in place to prevent and mitigate the impact from such events.

“Title underwriters continue to exhibit financial stability as they have maintained adequate levels of policyholders’ surplus while increasing direct premiums written period over period,” said Douglas Powell, senior financial analyst for Demotech. “It is also worth noting that in the second quarter, aggregate underwriting results were positive. This is the first time since 2007 the industry has reported a net underwriting gain on a year-to-date basis in consecutive quarters.”

FSRs are a leading indicator of the financial stability of Title underwriters and present Demotech’s opinion of the ability of an insurer to meet its insurance related obligations based upon an assessment of financial information. FSRs are not an endorsement of any particular insurer or its products. Insureds and agents need to independently evaluate their relationship with a particular insurer as well as the applicability of that insurer’s products to the needs of the insured or agent.

Visit Demotech for a complete list of the FSRs assigned to title underwriters.

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